Why did this fail (again!)

[ahwilliams30]

Before I get into this one, should I keep making new threads for these trades or post failed trades I have questions on in the same thread? I'm going to have a lot coming soon...

This is a 3rd entry by the count but looks like a short term up trend with a break and new high then big bearish bar off the EMA. This is the type of trade I consider my bread and butter and I'd take it any day. We're looking for a retest of the strong down trend and expecting prices to trade back to range support after a failed break out of resistance. It does look a tad congestive and the bullish bar prior to the signal bar closes close to the EMA which could be concerning. It's also at the mid line of the range where I know trades can get a bit hairy. Even with these, I'd still probably take it. What else am I missing here?

Trend lines are same as Mack. Didn't mark down which day it is from (sorry!)

[eric-pal]

Please create a new thread for each question.

As you noted, prices have become congested and that is part of concern but is a subset of what is happening.

Short is the correct potential bias, however there are a few other aspects which "go into the mix".
1. Please note the size of the bars. Did you catch the size of the bull bar going into the ema and then turning back around. Good size. This is a magnetic pull effect. These happen when there is an area of resistance and both sides agree "for a truce" until that test.
2. Note the white lines on the enclosed graphic. These are high volume areas which may act as magnetic pull areas as S/R and inflection points have been created. Worth reviewing the appropriate lecture in the 4 series on horizontal alignment.
3. The size of your entry bar is that large for a reason (potential magnetic pull). It is also a very large bar, which magnetic pulls can create.
4. if the bar had been 1/2 of the size, and momentum had been moving consistently down, take every time. With the size of the bar, and being larger than the ATR sizing, additional caution is warranted.
5. Distance from the ema. This is another factor, as the ema, especially in always in situations also acts with magnetic pull (mean reversion).

Good bias reading! That is the most important portion. With the signal bar being much smaller, well you see the result .
Taking into account some of the above notes, review many charts to observe these effects.

Hopefully helpful & good trades to you!

HAPPY NEW YEAR!

[ahwilliams30]

This all makes a lot of sense. Thank you Eric and happy new years to you as well!